The department of consumer affairs (DoCA) on Wednesday suggested a series of measures including upfront disclosure of insurance policy terms by agents, simpler policy documents and advised insurers not to sell life insurance policies as financial products. The Insurance Regulatory and Development Authority (IRDAI) has been urged to take note of these suggestions as well.
The steps are aimed at reducing disputes between insurers and consumers, and cutting the backlog of cases in various fora, including courts.
According to Rohit Kumar Singh, secretary, DoCA, key issues raised amongst stakeholders in the insurance industry also include ambiguity in insurance contracts and inflexible policy terms.
Out of around 0.55 million cases pending in various consumer forums in the country at present, 0.16 million cases are associated with the insurance sector.
According to official data, 80% of cases are pending at the district consumer forums and the share of pending cases in state and national consumer forums are 17% and 3% respectively.
Other issues raised at the meeting held with the officials of Department of Financial Services, representatives of insurance companies, members of consumers courts and representatives of consumer forums include agents not sharing full policy documents with consumers at the time signing of policy, repudiation of medical insurance claims on the basis of pre-existing diseases and crop insurance claims tied up with a central scheme which is not flexible.
“Huge pendency of cases in consumer forums related to the insurance sector across the country is cause of concern and we are hopeful that insurance companies will address the issues voluntarily ,” Singh said at a meeting. DoCA may ask IRDAI to take the issues with insurance companies if the issues are not addressed.
Cases in consumer forums are divided into categories such as travel insurance, life insurance, home insurance, car insurance, marine insurance, fire insurance, crop insurance, and medical insurance. A large chunk of cases relate to medical insurance and life insurance claims.
He said that consumer court cases can be reduced if the insurance policy terms and conditions are made simpler, clear and in understandable language incluidng regional languages. “t is also important to create awareness among consumers that they should not sign the policy document without properly understanding terms and conditions of the specific policy,” Sing said.
He also suggested settlement of litigations in the consumer courts through mediation. “However, the representatives of the insurance companies are bound by the restriction and not delegated proper powers to take a decision. We are requesting the companies to delegate powers to them so that cases are resolved expeditiously,” he said.
Meanwhile, the United India Insurance Company Ltd has agreed to delegate power to its representative to settle cases through mediation and negotiations and hopeful other companies will follow, he said
Officials said that selling of life insurance policies as financial instruments should be curbed; these schemes provide only life cover.
Around 82,000 cases relating to banking sector is currently pending before various consumer forums.
